Equinix Inc (EQIX), Lamar Advertising Co (LAMR), Iron Mountain Incorporated (IRM): Should Investors Buy These Potential REIT Conversions?

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Lamar also wants to convert its billboard display ownership into REIT

Lamar Advertising Co (NASDAQ:LAMR), if converted into REIT, could become a good stock for investors. It has more than 144,000 billboard advertising displays in 44 states in the U.S., Canada and Puerto Rico. What I like about Lamar is its diversified customer base, with no individual advertiser representing more than 1% of Lamar’s advertising billboard revenue.

Lamar Advertising Co (NASDAQ:LAMR) has continued to reduce its expenses this year by outsourcing the advertisement material production to national suppliers. It also saved an additional $750,000 on its illumination technology for its static billboards. Its operating margin also experienced a nice increase, from 9.2% in 2009 to 18.4% in 2012. With the growing margin and cost reduction, its EBITDA expects to be on the rise in the near future.

My Foolish take

With the conversion into REIT, all three of the businesses mentioned above could return much more cash to their shareholders through dividends. The market will realize that, driving their share prices much higher. The REIT conversions all depend on IRS decisions, creating an unknown element for investors to consider.

Among the three, I like Lamar Advertising Co (NASDAQ:LAMR) the most with its growing business performance and its diversified customer base. A conversion could make Lamar dividend distribution more stable.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Equinix.

The article Should Investors Buy These Potential REIT Conversions? originally appeared on Fool.com.

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